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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
Before the value of facilities can be deducted from the employees’ wages, the following requisites must all be present:
- Proof must be shown that such facilities are customarily furnished by the trade;
- The provision of deductible facilities must be voluntarily accepted in writing by the employee;
- The facilities must be charged at reasonable value. (Our Haus Realty Development Corporation v. Alexander Parian, et al., G.R. No. 204651, August 06, 2014)
Article 97 of the Labor Code provides that:
“Wage” paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor and Employment, of board, lodging, or other facilities customarily furnished by the employer to the employee. “Fair and reasonable value” shall not include any profit to the employer, or to any person affiliated with the employer. (Emphasis supplied.)
Facilities refer to items of expense necessary for the existence and subsistence of the employee and his/her family so that, by express provision of law, they form part of the wage and when furnished by the employer are deductible therefrom.
The value of the facilities may be deducted from the wage or salary of the employee since if these items are not furnished by the employer, the employee would have to spend and pay for them just the same.
Facilities include articles or services for the benefit of the employee or his family but exclude tools of the trade or articles or services primarily for the benefit of the employer or necessary to the conduct of the employer’s business.
Under the law, value of facilities may be deducted from the wages of an employee.
According to the case of Our Haus Realty Development Corporation v. Alexander Parian, et al. (G.R. No. 204651, August 06, 2014) before the value of facilities can be deducted from the employees’ wages, the following requisites must all be present:
- Proof must be shown that such facilities are customarily furnished by the trade;
- The provision of deductible facilities must be voluntarily accepted in writing by the employee;
- The facilities must be charged at reasonable value.
The Supreme Court likewise ruled that:
“In reality, deduction and charging both operate to lessen the actual take-home pay of an employee; they are two sides of the same coin. In both, the employee receives a lessened amount because supposedly, the facility’s value, which is part of his wage, had already been paid to him in kind.”
It must be noted that the employee’s receipt of such facilities as furnished by the employer is not sufficient to allow deductions from employees’ wages.
Read also: SUPPLEMENTS VS. FACILITIES
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding taxation and taxpayer’s remedies, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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